Investing in Your 20s and 30s: Build the Foundation That Builds Your Freedom

Gifts of Wisdom: Save on My Books + Mastermind (Until 31st October 2025)

Every Diwali, we clean corners we don’t usually look at. It’s a nice metaphor for our inner world too — for our habits and biases that need some fresh air. So this year, I’m sharing limited-time offers on the few things I created to help us see more clearly: my books and the Mastermind Membership.

🎁 The Sketchbook of Wisdom & Boundless (both hardcover): Read my reflections on self-discovery, growth, and living a life that’s yours.

• Click here to buy Boundless ₹1799 ₹1299
• Click here to buy Sketchbook ₹1799 ₹1499
• Click here to buy the combo (Boundless + Sketchbook) ₹3598 ₹2599
• Even bigger discounts are available on bulk orders — you’ll find details on the respective order pages.

🎁 Mastermind Value Investing Membership: My most comprehensive learning program, which now also includes Value Investing Almanack and weekly/biweekly live Q&A sessions, is open with ₹3,000 off for new members. Click here to join now.

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I recently wrote an article about investing in your 40s and 50s. A reader wrote back:

Are the lessons you wrote about also applicable to someone in their 20s or 30s? I’m 27, just started earning decently, and everyone keeps telling me to ‘start investing early.’ I’ve begun SIPs in a few funds, but honestly, I don’t know what I’m doing or why. Should I buy stocks? Should I buy a house? Should I ‘go aggressive’ while I’m young?

I smiled reading that, because it took me back twenty years. When I was his age, I too believed that getting rich was a race and that the faster I invested, the sooner I’d reach the finish line.

It took me a while to learn that, more than speed and aggression, investing and wealth building requires direction, patience, and consistency.

If your 40s are about defence and preservation, your 20s and 30s are about building the foundation. And it starts with the formation of the right money habits, systems, and mindsets that then get the compounding snowball rolling for the next few decades.

So, in this article, I’ll share some thoughts on how you can invest while in your 20s and 30s. Again, like all that I advise, there’s nothing extraordinary here. But who said you need to do extraordinary things to get extraordinary results with your money?

Let’s start right here.

1. The Right Mindset: Play the Long Game

When you’re young, in the busyness of starting your career and the initial stages of building your life, you rarely think beyond the next few weeks or months, forget thinking about decades. But interestingly, the most powerful advantage you have in your 20s and 30s isn’t intelligence or market knowledge, but time.

Compounding works like magic, but only when given enough years to perform. If ₹10,000 a month grows at 12% annually, it becomes ₹3 crore in 30 years. Wait ten years to start, and you’ll end up with just around ₹1 crore. That’s the real cost of delay. So, my first advice to you is to not get too worked up about which stock to buy or which fund to buy. Seek good investment counsel and then…just start.

And before you start with your money, start with investing in your skills. The best ROI in your 20s and 30s often comes not from SIPs, but from upskilling, reading, writing, and building a reputation that compounds. Focus on learning to communicate clearly, think critically, and manage people. These are assets that don’t depreciate or crash.

2. Budgeting and Savings Rate

You can’t invest what you don’t save. In your 20s and early 30s, focus less on optimising returns and more on maximising your savings rate. A good starting point, maybe after you are past your first year of income generation, is saving 25–30% of your take-home income. Split it roughly as:

• 10% for short-term goals and emergency buffer
• 15–20% for long-term compounding (equity + retirement)

If you get a raise, don’t inflate your lifestyle immediately. Increase your savings rate instead. Lifestyle creep is painless at first, but dangerous later.

Practical next steps:

• Open a separate savings account for investments (so you don’t mix spending and saving).
• If you earn ₹60,000 a month, aim to save ₹15,000–₹18,000. ₹6,000–₹8,000 can go toward your emergency fund and short-term goals. ₹9,000–₹10,000 can go into long-term investments like SIPs. The exact number matters less than the habit of paying yourself first.
• Start one SIP in a low-cost index or a high-quality flexicap fund. Automate it for the same date as your salary credit.
• Set one calendar reminder each year to review, not every month.

3. Insurance and Safety Nets

In your 20s, insurance feels unnecessary. You’re young, healthy, and invincible, or so you think. But life doesn’t wait for you to get older before throwing curveballs.

• Term insurance: If no one depends on your income yet, you can skip it for now. But once you have dependents or a loan, buy a plain term plan covering at least 15–20 times your annual expenses or 8–10 times income.
• Health insurance: Even if your employer provides one, take a personal policy early. It’s cheaper and continuity matters.
• Emergency fund: Keep at least 6–8 months of expenses in an easily accessible account or liquid fund. This is your safety net when life decides to test you.

This part of your personal financial management is about making sure one bad event doesn’t wipe out years of progress.

4. Asset Allocation: Simplicity Wins

In your 20s and early 30s, you can afford to be equity-heavy. Here’s a simple thumb rule for long-term goals:

• Equity (stocks or funds): 70–80%
• Debt (FDs, short-term funds, bonds): 20–30%
• Gold: optional 5%

You don’t need ten funds or a fancy portfolio. Two or three well-chosen index or flexicap funds are enough. Review once a year, not every week.

If (and only if) you enjoy analysing companies, buy a few high-quality businesses you understand. But limit each position to what you can sleep peacefully with. Remember, the goal is endurance, not excitement. You can seek the latter elsewhere.

5. Don’t Rush to Buy a House

Our culture glorifies owning a home as the ultimate proof of success. But in your 20s and 30s, flexibility often beats ownership. If your career, city, or life goals are still fluid, renting may actually be smarter. A home loan is long, illiquid, and emotionally binding. Buy your house only when:

• You’re sure about staying in one city for a decade, and
• You can afford 20–30% down payment without touching your emergency fund or investments.

Treat your first house as a home, not a “property.” You can always invest in real estate later once your financial base is strong.

6. Avoid the Get-Rich Traps

No matter your age, the world around you is loud. In fact, it’s now louder than ever. One day it’s “passive income” gurus, F&O traders flaunting screenshots, or finfluencers promising to double your money in six months.

But the truth is timeless: if something promises high returns with low effort, you are the product. So, tune out the noise and avoid:

• Leverage (borrowed money) to invest. It amplifies mistakes faster than returns.
• Insurance-cum-investment products (ULIPs, endowment plans). They rarely beat a simple term plan plus disciplined investing.
• Credit-risk debt funds chasing a few extra points of yield. They often add more risk than reward.
• Speculative trading (intraday, options, etc.). These are games of adrenaline, not compounding.

As with investing across age groups, even in your 20s and 30s, you don’t need to hit sixers to get to where you want to go financially; you just need to avoid getting out.

Practical next steps: If you want to learn more, read:

• The Psychology of Money by Morgan Housel (mindset)
• Let’s Talk Money by Monika Halan (personal finance basics)
• The Little Book of Common Sense Investing by John Bogle (for long-term investing)

Spend an hour a week learning about money. It compounds just like your financial investments.

7. Retirement Planning: Think Early, Not Urgent

Retirement feels far when you’re 27. But the earlier you start, the less you need to save. For example, assuming a 12% annual return, and before adjusting for inflation:

• Start at 25: ₹10,000/month = ₹5.5 crore at 60
• Start at 27: ₹10,000/month = ₹4.4 crore at 60 (just a two-year delay from age 25, and you’re already short by ₹1.1 crore by 60)
• Start at 35: ₹10,000/month = ₹1.7 crore at 60

Do you see the price of procrastination?

Use a simple thumb rule — aim to invest at least 10–15% of your income toward long-term goals like retirement. Use equity mutual funds, NPS, or direct stocks. Let compounding do the heavy lifting while you focus on earning more, which adds to the compounding.

8. Documentation and Simplicity

Even in your 20s and 30s, get your financial life in order:

• Nominate beneficiaries for all accounts
• Maintain a simple digital + physical record of investments
• Avoid unnecessary complexity (10 mutual funds ≠ diversification)

Simplicity is efficiency. You want a system you can manage in busy years, not a jungle of accounts that overwhelms you and your dependents later.

9. Health, Habits, and Happiness

You can’t compound money if you can’t compound in life. So, build the right habits early:

• Eat real food
• Sleep 7–8 hours (10 PM to 6 AM is better than 12 AM to 8 AM)
• Strength training and daily movement
• Avoid toxic stress, both financial and emotional
• Avoid toxic people (age no bar)

A healthy 30-year-old investor has more time to recover from losses, both in portfolio and body, than a 50-year-old who ignored their health for decades.

10. Friends, FOMO, and Finfluencers

In your 20s and 30s, comparison is the thief of contentment. You’ll see friends making quick money, buying cars, or posting photos from Europe. If you are not in those cars or photos, that’s fine. The big idea here is to stay solvent, sane, and satisfied while others burn out chasing “more.”

As for social media, ruthlessly unfollow people who trigger greed, fear, and envy. Many of them have large followings precisely because they trigger these emotions. Instead, read timeless books that calm you, and spend time with people who make you think long-term.

A Quick Money Checklist for Your 20s & 30s

It’s easy to feel overwhelmed by all the moving parts of money. When in doubt, come back to this simple checklist, which covers the few things that really matter in your 20s and 30s:

☐ Emergency fund: 6–8 months of expenses
☐ SIPs in 2–3 index/flexicap funds
☐ Health insurance in your own name
☐ Term plan once you have dependents or loans
☐ No EMIs for consumption (gadgets, trips)
☐ 25–30% savings rate
☐ Annual review, not daily worry
☐ Ongoing skill-building

Final Thoughts: Build Optionality

The purpose of money in your 20s and 30s isn’t just retirement, but to set you up for “freedom.” Freedom from:

• Dependence
• Financial anxiety
• Paycheque-to-paycheque living
• Work you don’t love
• Lifestyle envy
• Need to impress
• Debt trap
• Regretful choices

Every rupee you save buys you time and choice. Every bad financial decision sells it away. So, instead of focusing on chasing quick wealth as your peers may be indulging in, start creating optionality, which is that beautiful state where you can choose your path, not because you’re rich, but because you’re not trapped.

In the end, if there’s one mantra I’d leave you with, it’s that the goal of investing in your 20s and 30s isn’t to beat the market, but to start building a life that doesn’t collapse when the market does. Yes, play offence, but with a helmet on. Learn, earn, save, invest, and repeat. Don’t worry about being perfect. Just stay in the game.

One day, when you’re in your 40s and then 50s, you’ll look back and thank your younger self who decided to play the long game, because that person gave you the greatest dividend of all: a life that feels unhurried, and free.

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Gifts of Wisdom: Save on My Books + Mastermind (Until 31st October 2025)

Every Diwali, we clean corners we don’t usually look at. It’s a nice metaphor for our inner world too — for our habits and biases that need some fresh air. So this year, I’m sharing limited-time offers on the few things I created to help us see more clearly: my books and the Mastermind Membership.

🎁 The Sketchbook of Wisdom & Boundless (both hardcover): Read my reflections on self-discovery, growth, and living a life that’s yours.

• Click here to buy Boundless ₹1799 ₹1299
• Click here to buy Sketchbook ₹1799 ₹1499
• Click here to buy the combo (Boundless + Sketchbook) ₹3598 ₹2599
• Even bigger discounts are available on bulk orders — you’ll find details on the respective order pages.

🎁 Mastermind Value Investing Membership: My most comprehensive learning program, which now also includes Value Investing Almanack and weekly/biweekly live Q&A sessions, is open with ₹3,000 off for new members. Click here to join now.

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